BY KURT HANSON
In a stunning victory for webcasting, both the Senate and the House of Representatives unanimously passed a revised version of H.R. 5469 late last night that clears the way for copyright owners to offer webcasters a percentage-of-revenues royalty rate, essentially allowing the parties to mutually agree to override the CARP decision of last spring.

The Senate passed the bill at 10:32PM ET and the House passed it at 2:44AM. It now goes to President Bush for his signature.

The bill was actively supported by virtually all players on both sides of the debate this year, including the record industry, artist representatives, large webcasters, small webcasters, college radio representatives, and religious broadcasters.

In what was viewed as a surprise by some observers, the legislative staff in the office of retiring Sen. Jesse Helms (R-NC) (pictured) apparently played an active and valuable role in crafting what the parties concluded was a much better piece of legislation than the one Helms blocked at the last moment late last month (here).

Rates and terms removed from legislation
The key difference between the bill that the House passed in October and the revised bill, renamed the "Small Webcaster Settlement Act of 2002," is that Congress did not establish any definition of "small webcaster" or set any royalty rates in the final version of the legislation.

Rather, the bill grants both sides the right to enter into a voluntary agreement "without fear of liability for deviating from the fees and terms of the July 8 order" (i.e., the Librarian of Congress's modified CARP decision).

Specifically, the bill does so by permitting the receiving agent of royalty payments (i.e., SoundExchange) to negotiate on behalf of all copyright owners, whether they are members of SoundExchange or not, for the period beginning October 28, 1998 (i.e., the passage of the DMCA) and ending December 31, 2004.

Under the new mechanism established by this act, the voluntary agreement envisioned would be submitted to the Copyright Office, published in the Federal Register, and subsequently made available to all qualifying webcasters.

However, the bill grants the receiving agent that authority to make a settlement with the small commercial webcasters only until December 15th -- so the clock is ticking for both sides to "paper the deal."

Royalty payments from noncomms
suspended until next June
The version of the bill passed last night also suspends ALL royalty payments due from noncommercial webcasters until June 30, 2003, giving both sides time to work out a new voluntary royalty structure.

Furthermore, the bill adds a new definition of "noncommercial" that permits webcasters who are currently for-profit entities to file for nonprofit status and take advantage of this option as long as they have a "commercially reasonable expectation that such exemption shall be granted."

This provision seems to permit any "hobbyist" webcaster to make a choice of whether they would like to be a for-profit business or a nonprofit. The bill gives the parties involved until May 31, 2003 to negotiate their voluntary license.

Stronger non-precedential language added
The bill contains new and very strong language intended to prevent the deal negotiated in Sensenbrenner's office from being used as precedent in future CARPs.

One example: "It is the intent of Congress that any royalty rates, rate structure, definitions, terms, conditions, or notice and recordkeeping requirements, included in such agreements shall be considered as a compromise motivated by the unique business, economic and political circumstances of small webcasters, copyright owners, and performers rather than as matters that would have been negotiated in the marketplace between a willing buyer and a willing seller."

Another example: "Nothing in the Small Webcaster Settlement Act of 2002...shall be taken into account by the United States Court of Appeals for the District of Columbia Circuit in its review of the determination by the Librarian of Congress of July 18, 2002, of rates and terms for the digital performance of sound recordings and ephemeral recordings."

Such language apparently satisfied the concerns of terrestrial broadcasters (e.g., the NAB and the National Religious Broadcasters) about the early version of the bill._________________"A dream is a wish your heart makes. Only you can make the dream come true."

I would not say the danger is 100% over....not at this time. But I will say that at least the future of Internet Radio is now a bit more secure. And thank goodness to _________________"A dream is a wish your heart makes. Only you can make the dream come true."